Marketing Strategy : "Freebies"

Every so often we see companies giving away free products and / or services in order to capture the market. For businesses it seems like a formidable option. Why not ? After all, who doesn't like free stuff ? The question is though, what is the logic behind that and how practical are those offers ?

The logic behind such company policy :

1. Freebies are a great way to advertise the products, especially for a budding company. The strategy helps an aspiring company to do something that we call "brand placement". Potential buyers get a chance to feel the goods, try it and then make the decision to purchase it. First hand experience allows for good testimony on the behalf of the company. Word of mouth also does passive advertisement through such offers. To sum it up, freebies are given away in an effort to make more money. In other words, we get things for free and then end up spending even more!

2. Also, if they want the buyers to switch, there is no better way than to provide them with the product at no cost. This gives the user a chance to compare the item with already existing products. If it proves to be better, the company has made its point.

3. Another marketing strategy is to give out free offers to the company's loyal customers. Retaining the existing customer base is the key to success since it generates steady revenue. "Brand loyalty" is a critical tool for assessing the worth of a company. These days, every business maintains its own database. With the help of technology they can determine our demands, purchase habit and potential needs. For example, when I go to Radio Shack, I get asked about my zip code. That allows them to learn what kind of products they need to have in their inventory. When I go to CVS and use my CVS card, the machine automatically generates coupons for me based on my purchases. As I mentioned before, that is another way for them to make me spend more. Just the other day, at the CVS register, a coupon for 10 "EXTRA BUCKS" was given to me. However, I could get $10 off only if I would buy things worth at least $50.

Now, if you pay attention, you will see most of those offers are US based. The question is, why?